​​Laybys and buy now, pay later

Layby means you pay instalments and get the item once it's paid off. Buy now, pay later means you get the item straight away then pay it off. Consumer laws protect laybys but not buy now, pay later sales.

Layby and buy now, pay later schemes don't make products cheaper. You pay the same price, just spread out over time.

Before you buy on layby

Layby is a popular way to buy goods when you can’t afford to pay for them straight away.

A layby sale is when:

you pay for something in instalments

the retailer keeps the item until you’ve paid for it (or an agreed part of it)

the item costs less than $15,000.

Any sale that matches this description or type of sale is a layby sale, even if the seller calls it by another name, eg part-payment.

You can't be charged interest if you buy something on layby.

Your rights when you buy on layby

If you buy on layby, the Fair Trading Act (FTA) provides you with certain protections and rules that traders must follow. These include the rights to:

a set price

have the products kept safely until fully paid off, unless you don’t make payments

a written copy of the layby contract before you buy

a free statement of your account at any time

cancel the sale at any time before the final payment and get a refund — minus a reasonable cancellation fee.

The layby contract must be dated, legible and easy to understand. The front page must:

describe the products

summarise your right to cancel and show any cancellation fee

include the retailer’s contact details

state the total price to pay.

You can also ask for a free statement of your layby account at any time, which the retailer must provide within five working days. The statement must include:

the purchase price

total amount paid so far

the balance owing and when this should be paid

any cancellation fees.

If the retailer doesn’t give you your contract or a free statement on request, you can cancel and they cannot charge you a cancellation fee.

Cancelling a layby

You can cancel for any reason before the last payment. Tell the retailer. After cancelling, the retailer must immediately give you a full cash refund of the amount paid already. They can charge a reasonable cancellation fee. Retailers can recover the cancellation fee as a debt if you don't pay it.

Your right to a refund is protected by the Fair Trading Act. The retailer can't ask you to accept a credit note instead.

Example — Cancellation fee too high

Max buys an entertainment system on layby for $10,000. His wife is horrified when he tells her. Max cancels the next morning and the retailer charges him a $100 cancellation fee. Max offers to pay $20, which he thinks is reasonable for the 10 minutes of staff time he used setting up the layby. If the retailer disagrees, they need to justify that the $100 fee is reasonable.

If it's hard to afford your layby or buy now, pay later payments, look at your spending habits. Talking to a budgeting advisor in your community can help.

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